FINRA Fines Wells Fargo $500k Over Unsuitable Recommendations

According to FINRA,
Wells Fargo is being fined $500,000 for
unsuitable recommendations made to customers between August 2005 and July 2012. FINRA says that the
brokerage firm recommended to customers to purchase Structured Repackaged
Asset-Backed Trust Securities or “STRATS” that resulted in
substantial financial losses.

FINRA explained that Wells Fargo failed to educate its brokers and financial
advisors about the risks associated with STRATS, including the risk that
investors could sustain substantial financial losses by investing in this
type of structured product. When brokers do not fully understand the structure
or risks of an investment, they cannot make informed recommendations to
their customers.

Between August 2005 and July 2012, FINRA says that Wells Fargo sold $12
million in STRATS to its customers. FINRA acknowledged that while Wells
Fargo advisors were educated in structured products, they were not specifically
educated on STRATS. Since Wells Fargo advisors lacked a reasonable basis
for recommending STRATS to investors, their doing so constitutes an unsuitable
recommendation.

Wells Fargo consented to FINRA’s findings, agreeing to a censure,
fine of $500,000, and financial restitution to customers.

Meyer Wilson represents individuals who suffer financial losses as a result
of investment fraud or misconduct. Unsuitable recommendations are a common
cause of investment losses. If you experienced substantial losses on your
investments, we invite you to contact us today to tell us what happened
to you. We will provide you with a
free consultation.